social security ot

PORT WASHINGTON, N.Y. (MarketWatch) — Along with the Republicans and the Federal Reserve, you may be able to add President Obama to the list of those who don’t give a hoot about seniors.

In his new budget, the president appears to be heading in the same direction. He wants to reduce Social Security benefits at a time when, if anything, seniors need an increase.

His idea of cutting these benefits is a sop to the Republicans. The chief executive evidently hopes that they will accept another round of tax increases in order to lower Washington’s budget deficit going forward.

This gambit is misguided, unfair and may also be illegal. It makes it seem that the president either doesn’t know or doesn’t care about the needs of our senior citizens.

As everyone must know by now, Obama wants to change the price index used to calculate the annual rise in seniors’ cost of living. He wants to switch from the consumer price index (CPI), to something called the chained CPI.

The current CPI measures the cost of a fixed market basket of goods and services purchased regularly by a typical working household. By contrast, the chained CPI alters the weights of the items in the index to reflect changes in consumers’ buying patterns as relative prices change.

For example, if the price of meat goes up one month and the price of fish goes down, people will buy less meat and more fish. This means that their cost of living will go up more slowly, and thus their cost of living a

But as far as seniors are concerned, the current COLA does not begin to cover the rise in their cost of living. This is because once someone retires, their expenses as a percentage of household income change.

Retirees buy fewer cars, houses and electronics — the prices of which are steady to falling — than do their younger, employed counterparts. On the other hand, they spend more on health care, food, energy and local taxes, for which prices, guess what, are actually rising faster than the current CPI.

STW - This is quite interesting isn't it? The basis for chained CPI is that consumers react to increased prices in one item by substituting another product - makes real world sense. Of course with health care there isn't quite the same flexibility, but under Obamacare that shouldn't have mattered since the key rationale for the program was lower costs.

Trending Tickers

i

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.

Yahoo! Finance Worldwide

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.